AGI – On Thursday 5 May Wall Street closes in deep red and records his worst session of the year, with investors reviewing the excitement sparked by yesterday’s Fed announcements and reversing sentiment. The Nasdaq archives the third biggest loss of points ever, after the ‘black’ sessions of 12 and 16 March 2020, at the beginning of the Covid pandemic.
The Dow Jones left 3.12% on the ground at 32,997.97 points (with a daily loss of 1,033.07 points), the S&P 500 lost 3.44% to 4,152.38 points and the Nasdaq collapsed to -4. , 99% at 12,317.69 points.
The investor sentiment worsened in the face of fears that the Federal Reserve’s interest rate hike will not be enough to tame the record spike in inflation.
All three major Wall Street indices have erased the gains made during Wednesday’s rally. Tech megacaps plummeted, including Alphabet (-4.71%), Apple Inc (-5.57%), Microsoft Corp (-4.36%), Google’s parent company, Meta Platforms (-6.77%) ), Tesla (-8.33%) and Amazon.com (-7.56%).
However, it was not just high-growth stocks that fell, the ones that struggled in 2022 due to the prospect of rate hikes that question their potential future earnings. The selloff hit all areas of the market. “Investors aren’t looking at fundamentals (like earnings) right now, and that’s more of a sentiment issue,” said Megan Horneman, chief investment officer at Verdence Capital Advisors.
The US central bank raised interest rates by half a percentage point on Wednesday as expected, and President Jerome Powell explicitly ruled out a 75 basis point hike in a forthcoming meeting. Traders, however, raised their bets by a 75 basis point hike at the June meeting.
Concerns over Fed policy moves, mixed earnings from some big growth companies, the conflict in Ukraine, and pandemic-related lockdowns in China have recently hit Wall Street, putting a better-than-expected quarterly season in the shade.
Only a small number of companies in the S&P 500 remained in positive territory. Among them there is Twitter, which rises by 2.57% after Elon Musk revealed that Oracle co-founder Larry Ellison and Sequoia Capital are among the investors who will support his acquisition of the social media giant with $ 7.14 billion in funding.
All 11 major S&P sectors fell, with discretionary consumption in the lead. The index was dragged down by Etsy Inc (-16.83%) and eBay Inc (-11.72%), after both expected second-quarter revenues fell short of Wall Street expectations.
The tech sector has also collapsed, with Intuit Inc among the heaviest stocks (-8.50%) the day after agreeing to pay $ 141 million for the allegedly misleading advertising campaign for its TurboTax product. “The areas of the market that are purely discretionary are the ones that are being hit today, as everyone expects this to be a tough time for consumers in the coming quarters,” said Horneman of Verdence Capital Advisors.
The Cboe Volatility Index, also known as Wall Street fear indicator, rose significantly today to 22.7%.
Investors’ attention now shifts to the monthly employment report to be released tomorrow by the Department of Labor. The report will give significant clues to the strength of the labor market and its impact on monetary policy.
Collapse of Asian stock exchanges
Collapse at the opening for Asian stock exchanges, due to the fall on Wall Street caused by concerns about rising interest rates and inflation. The Hang Seng Index fell 2.44%.
The Shanghai Composite Index fell 1.84 percent, while the Shenzhen Composite Index fell 2.42 percent. In Japan, the Nikkei 225 index opened down (-0.13%). The broader Topix index at -0.21%.
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Wall Street in deep red, down all the indices. Asian stock markets also collapsed
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